Nepal poised for closer ties with China under new prime minister

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Returning PM Oli may bolster economic and military cooperation with Beijing

Prime Minister K.P. Sharma Oli is a veteran that has held the office three times before.   © AP

NEW DELHI — The return of K.P. Sharma Oli as Nepal’s prime minister may usher in an era of closer economic and military ties with China amid frayed relations with India.

Oli — who heads the Communist Party of Nepal (Unified Marxist-Leninist), or UML — won a majority in a lower house vote of confidence and officially became prime minister on Sunday. This marks Oli’s fourth time in the role, including a stint as interim prime minister.

Ousted predecessor Pushpa Kamal Dahal lost a vote of confidence on July 12. Oli’s UML had left the governing coalition led by Dahal’s Communist Party of Nepal (Maoist Center), the nation’s third-largest political party.

Oli returned as prime minister by forming a new coalition with the Nepali Congress, the largest opposition party.

Nepal transitioned to a parliamentary republic in 2008 after abolishing a 239-year-old monarchy. Political instability has since persisted, with more than 10 changes of leadership.

In foreign affairs, the South Asian country has long taken a stance of nonaligned neutrality but has in many ways been caught between powerful neighbors India and China.

Nepal had maintained close ties with India based on their shared Hindu culture. Residents near the border could travel between the countries without passports.

In 2015, India called for the rights of Indian residents to be clearly stated in Nepal’s new constitution. Nepal did not grant this request, straining relations.

India imposed an economic blockade on Nepal that September, cutting off such supplies as oil and medicine. Oli, who was prime minister at the time, took an anti-India stance. An agreement was signed with China to allow cross-border transportation using Chinese ports, drawing backlash from India.

Oli has long supported China’s Belt and Road infrastructure-building initiative, and India fears that Nepal will sign a concrete project plan with China in the future.

A $300 million airport in central Nepal’s Pokhara received both funding and construction workers from China. It opened in 2023 but is little used.

The situation resembles that of the international port built in southern Sri Lanka’s Hambantota. Large-scale infrastructure projects developed with Chinese funds run the risk of a “debt trap” where the host country loses its interest in exchange for support.

“Oli has always been pro-China for a decade or so,” said Aditya Gowdara Shivamurthy, associate fellow with the strategic studies program at the Observer Research Foundation, an Indian think tank. “It is quite obvious that there is a strong relationship between his party and the Communist Party of China.”

COVID-19 hit Nepal’s tourism industry hard, further boosting China’s political influence.

Chinese President Xi Jinping has recently moved to strengthen defense cooperation with India’s neighbors, such as Nepal and the Maldives. A Chinese military delegation visited Nepal this March to discuss bilateral defense cooperation and the regional security situation.

The Nepalese government decided in May to include a map showing disputed border areas with India as its own territory on new banknotes. India has grown increasingly wary of a Nepal that is more assertive with the backing of the Chinese military.

“India … has actively tried to counter China and Chinese projects” in Nepal, said Shivamurthy, who sees India “trying to maintain a working relationship with the government” of Nepal.

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